With important things going on in our nation, such as Britney Spears' new baby and Angelina Jolie's relationship with Brad Pitt, it's easy to understand how some important news stories got a little lost. Here's one worth noting, though.
A few months ago, Nina Olson, our National Taxpayer Advocate, sent a report to Congress with some important observations and suggestions. She also outlined areas of focus for the Office of the Taxpayer Advocate (OTA) in 2006. Here are some highlights:
- In a nutshell, she suggests that the IRS is focusing too heavily on enforcing tax laws, and not putting the needs of all taxpayers first. The IRS "must serve all taxpayers."
- With the IRS now having been given the OK to use private debt collectors to gather some overdue taxes, the OTA will work with the IRS to design policies and procedures for the new system, protecting taxpayer rights. (Debt collection can be a scary business.)
- Olson aims to make recommendations to improve the IRS's process for collecting money. She also noted that the IRS is considering changing its Collection Due Process to prevent abuses, but that the changes might hurt people using it legitimately.
As I read through a summary of the report, the item that struck me the most was a simple description of the Taxpayer Advocate Service (TAS). I suspect that most taxpayers are completely unaware that the TAS exists, and that's a shame. Here's why:
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS which ensures tax problems that have not been resolved through normal channels are handled promptly and fairly. There is at least one Local Taxpayer Advocate in each state. TAS can help if a taxpayer is facing:
- An economic hardship or significant cost;
- A delay of more than 30 days to resolve an issue; or
- An action, response, or resolution deadline promised by the IRS that has not been met.
Qualified taxpayers will receive personalized service from an Advocate ... Taxpayers can gain quick access to TAS by calling TAS's toll-free number: 1-877-777-4778, TTY/TTD 1-800-829-4059.
I looked up Olson's report from last year and found that it covered more exciting topics. (Hey, we're talking taxes here -- it's all relative, right?) She cited the Alternative Minimum Tax (AMT) and sole proprietor tax noncompliance as taxpayers' two top problems.
"Although the AMT was originally enacted to prevent wealthy taxpayers from avoiding tax liability through the use of tax avoidance techniques," Olson noted, "it now affects substantial numbers of middle-income taxpayers and will, absent a change of law, affect more than 30 million taxpayers by 2010."
Our own TMF Taxes, Roy Lewis, has also tackled the AMT, explaining the complicated beast. Other triggers for it include large capital gains. So if you invested in Dell
Regarding self-employed people not reporting income, Olson noted that this costs more than $80 billion in lost tax revenues and negatively affects compliant taxpayers, and suggested that Congress consider requiring withholding money on payments to certain categories of non-wage workers.
Learn more about taxes in our Tax Strategies area. You can also get ready early for the next tax season in this article that compares Intuit's
And finally, if thinking about taxes makes your head hurt and you'd like an actual person (a financial pro, no less) to talk to about your financial situation, look into our TMF Money Advisor. It's a valuable (and inexpensive) service we're offering, featuring customized independent advice from a variety of objective financial experts. Try it for free.
Longtime Fool contributor Selena Maranjian owns shares of Microsoft. The Fool has a disclosure policy.
